Central Banks weekly interventions help control the national dram devaluation

 

According to the CB press office, NASDAQ OMX Armenia was not active over this week either, the interbank forex market operated throughout the week (except Tuesday)with the largest operations fixed on February 12 (the CB intervention made total $16.2 mln). The total 

amount of the transactions for the week was $18.850 mln and the average exchange rate was fixed at 494.10 AMD/1USD. To note, the first large interventions of the Central Bank in 2016 were on January 15 ($32.4 mln), January 29 ($23.8 mln) and February 5 (26.5 mln USD), 

while in 2015 the large interventions were on August 28 - $95 mln, September 19 - $22.2 mln, November 13 - $19.6 mln and smaller ones on December 11 - more than $6 million and on October 2 - $6 mln. 

 

The source says that on February 8-12, on the intrabank currency market (transactions with customers) the banks bought $44.2 mln (24% decline versus the previous week) at the average exchange rate of 493.80 AMD/$1, and sold $65.03 mln (14.5% drop versus the previous week) at the average exchange rate of 496.25 AMD/$1. In the meantime, the banks bought 5.05 mln EUR (weekly decline 40.5%) at the average exchange rate of 551.81 AMD/1EUR, and sold 7.9 mln EUR (weekly decline by 29%) at the exchange rate of 558.49 AMD/1EUR. The banks also bought 803.7 mln RUR at the average exchange rate of 6.30AMD/1RUR and sold 566.7 mln RUR (14.6% weekly decline) at the exchange rate of 6.41 AMD/1RUR.

 

During the previous week (February 1-7), the Armenian banks provided AMD loans worth 32 bln AMD and USD loans worth 77.6 mln USD. As compared with the previous week (January 25-29), AMD loans decreased by 5.9% and the ones in terms of USD nearly doubled. 

 

To recall, during 12 months of 2015 on the retail foreign exchange market of Armenia AMD weakened against USD from 477 to 482 AMD/$1m in average and strengthened against EUR from 571.5 to 529 AMD/1EUR and against Russian ruble from 8.2 to 6.9 AMD/1 RUR.Between December 14 and 28 Central Bank made almost daily interventions. AMDdepreciated amid decline of foreign trade turnover (more than 20%), while import dropped more significantly (26.5%) than export (3.9%) as well as decline of transfers inflow to Armenia more than by 30%, and this happened in conditions of low buying capacity of the population and low economic activity in the country. Since 2016, despite the weekly interventions of the Central Bank, AMD started depreciating again on the retail foreign exchange market of Armenia and stood at 496 AMD/1USD by February 12. At the same time AMD depreciated against EUR 

to 561 AMD/1EUR and appreciated against RUR to 6.4 AMD/1RUR.